Financial Literacy Among The Different Economics Classes in India

Abstract

Financial literacy has become a key factor influencing financial well-being, investment practices, and economic inclusion in India, especially among various economic strata. Current research indicates that although there has been a swift growth in financial markets and a variety of financial products, the general level of financial literacy in India is still inconsistent and comparatively low. Research consistently indicates that aspects like income, education, age, job type, and access to financial services play a crucial role in shaping financial knowledge and awareness. Higher-income, educated, and urban individuals show a greater grasp of financial concepts and digital tools, while low-income groups, rural communities, women entrepreneurs, farmers, and young people frequently encounter challenges stemming from restricted exposure, insufficient support, and systemic obstacles.
Research findings also show that financial literacy has a significant impact on investment choices, risk appetite, saving habits, and long-term financial strategies. Studies across various demographic groups—such as millennials, young professionals, MSME entrepreneurs, students, and rural families—indicate that people with greater financial literacy tend to diversify their investments, utilize digital financial services, effectively manage risk, and enjoy enhanced financial well-being. Nonetheless, various studies highlight a distinct divide between overall literacy and financial literacy, stressing that formal education by itself does not guarantee wise financial choices in a progressively intricate financial environment.
The examined literature highlights the necessity for focused, inclusive, and organized financial literacy programs designed for various economic classes and demographic groups in India. Support from government agencies, financial entities, educational institutions, and tech-based platforms—combined with advancements like fintech and AI-powered solutions—is crucial to close current gaps. Enhancing financial literacy is crucial for personal empowerment and informed financial decision-making, as well as for fostering financial inclusion, decreasing inequality, and aiding sustainable economic development in India.